Are you in compliance?

The Filing Cabinet

"The Filing Cabinet," which covers compliance with the Dodd-Frank Act and the Sarbanes-Oxley Act, as well as other regulatory action from the Securities and Exchange Commission, executive compensation, and shareholder activism, is written by CW staff writer Joe Mont. Mont welcomes questions, comments, and statements from readers on SEC filing matters and will address them here when appropriate. Readers can contact him at joe.mont@complianceweek.com.

Regulators are increasingly demanding greater evidence of well-developed anti-money laundering compliance programs, processes, and systems and controls, and yet global companies are struggling to keep pace with it all. According to a new webinar poll conducted by Arachnys and Charter, 50 percent of compliance teams said the greatest challenge posed by their existing due diligence practice is insufficient and inconsistent availability of quality data and intelligence. More results inside.

Aug. 13—The Treasury Department’s Financial Crimes Enforcement Network is stressing the importance of compliance and culture to ensure anti-money laundering efforts are successful. This week, FinCEN released a six-page compliance advisory to financial institutions, and its director Jennifer Shasky Calvery doubled down on that message during a speech before AML professionals in Washington D.C. FinCEN is advising that companies ensure leadership actively supports compliance efforts; that efforts to mitigate risks are not compromised by revenue interests; that relevant information is shared with the staff; and more. See inside.

A Securities and Exchange Commission enforcement sweep has resulted in charges against 28 individuals, six public companies, and investment firms such as Royal Bank of Scotland for failing to report information about their holdings before the required deadline or for contributing to such delinquencies. Andrew Ceresney, director of the SEC’s Division of Enforcement, said: “Inadvertence is no defense to filing violations, and we will vigorously police these sorts of violations.” Details inside.

A recent survey by accounting firm Kaufman Rossin found that many banks plan sizeable increases to their budget for anti-money laundering compliance over the next 12 months. In this week’s podcast, we talk to Ivan Garces, a risk advisory services principal at accounting firm Kaufman Rossin about the evolving risk landscape banks face and how it is driving greater investment in their compliance programs.

What’s the true cost of non-compliance? A study by Thomson Reuters makes the case that fines, while significant and growing, may be the least of what should worry companies that run afoul of regulations. Broader financial implications can include the end of a business line, an inability to sell specific products, falling share prices, and personal liability for executives. More inside.

As banks try to close the profitability gap created by a lingering low-interest rate environment and offer new services to customers, they face escalating compliance risks. Cyber-security and anti-money laundering controls are among the concerns flagged by the Office of the Comptroller of the Currency in its “Semiannual Risk Perspective.” More inside.

A new report from the IMF faults the United States for turning a blind eye to shell companies and unclear beneficial ownership—that is, the parties that really control a company or its related bank accounts, even if they do so behind the scenes. That loose approach, the report says, “creates the potential for U.S. corporations to be misused” for money laundering. More inside.

The Treasury Department’s Financial Crimes Enforcement Network is proposing a rule that would require investment advisers to establish anti-money laundering programs, file Currency Transaction Reports, and report suspicious activity. While the Bank Secrecy Act does not expressly include “investment adviser” among its list of entities defined as a financial institution, the FinCEN rule would do so for advisers registered with the SEC. Details inside.

New York Governor Andrew Cuomo has proposed a slate of new anti-money laundering and anti-terrorism regulations for financial institutions that fall under that state’s supervision. They include a requirement that senior financial executives certify their institutions have sufficient systems in place to detect, weed out, and prevent illicit transactions, possibly giving CCOs more reason to fear personal liability in enforcement cases. Details inside.

The Basel Committee on Banking Supervision, an international consortium that develops banking standards, has issued its “Basel AML Index,” an annual ranking of country risk regarding money laundering and terrorism financing. The overall conclusion this year, says Joe Mont: A majority of countries fall short in the effective implementation and enforcement of AML laws.

Banks lacking a Federal functional regulator have been hit with proposed rules by the Treasury Department’s Financial Crimes Enforcement Network that would require them to implement anti-money laundering programs. Joe Mont has more.

A key talking point of Republican Donald Trump’s campaign is to build a wall along the U.S./Mexico border, forcing Mexico to fund it. That plan, however, saysJoe Mont, could mean added compliance burdens for banks and an expansion of Know Your Customer protocols.

In this edition of the Compliance Week podcast, we talk to Ellen Zimiles, a managing director at Navigant Consulting, about governance enhancements in Canada that allow CCOs to report their companies for not giving them enough budget to be effective.

U.S. Sen. Sherrod Brown (D-Ohio) has asked the Treasury Department to review President Trump’s investment partners and business associates to assess whether there are violations of anti-terrorist financing, sanctions, or money laundering laws.

A bipartisan group of 24 attorneys general is urging Congress to advance legislation improving the transparency of shell corporations by requiring them to disclose who controls and profits from their activities.

The Financial Crimes Enforcement Network has issued an advisory to alert U.S. financial institutions of the increasing risk that proceeds of political corruption from Nicaragua may enter the U.S. financial system.

JP Morgan, the Wall Street bank that has racked up more than $23 billion in regulatory fines since the financial crisis, has released a 100-page report detailing its efforts to improve compliance, culture, and internal controls. The report, “How We Do Business,” was in response to pressure from shareholder activists who wanted the bank to be more forthcoming about how it wrestles with good governance.